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(Alliance News) - London's FTSE 100 is called to open a touch lower on Monday, kicking off the week with some slight trepidation after Friday's hotter-than-expected US jobs report which offered the dollar some respite.
The pound and euro recovered some of their Friday afternoon losses against the greenback, but still sat below the USD1.26 and USD1.08 thresholds, respectively.
"The apparent resilience of the US economy against a backdrop of a sharp fall in inflation expectations from the latest University of Michigan confidence survey has helped craft a narrative that despite the sharp rise in interest rates delivered over the past 18 months, the US economy will be able to avoid a severe recession. This scenario does present some problems for the Federal Reserve when it comes to managing market expectations of when rate cuts are likely to come, with the recent sharp fall in yields globally speaking to a widespread expectation that rates may well be cut sharply as we head into 2024," CMC Markets analyst Michael Hewson commented.
"This week's central bank meetings of the Federal Reserve, European Central Bank and the Bank of England are likely to be crucial in managing expectations when it comes to the timing and pace of when markets can expect to see rate cuts begin now, we know the peak is in."
The final Fed decision of the year is on Wednesday, after a US inflation reading on Tuesday. The BoE and ECB follow on Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 0.1% at 7,546.97
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Hang Seng: down 1.1% at 16,163.60
Nikkei 225: up 1.5% at 32,791.80
S&P/ASX 200: up 0.1% at 7,199.00
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DJIA: closed up 130.49 points, 0.4%, at 36,247.87
S&P 500: closed up 0.4% at 4,604.37
Nasdaq Composite: closed up 0.5% at 14,403.97
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EUR: up at USD1.0763 (USD1.0758)
GBP: up at USD1.2545 (USD1.2535)
USD: up at JPY145.37 (JPY144.51)
GOLD: down at USD2,000.03 per ounce (USD2,006.01)
(Brent): up at USD76.37 a barrel (USD76.00)
(changes since previous London equities close)
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ECONOMICS
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The average price tag on a UK home tumbled by nearly GBP7,000 in December, according to Rightmove. Across Britain, the average asking price for a home coming on the market fell by 1.9% or GBP6,966 in cash terms this month, reaching GBP355,177, the property said. In November, the average asking price was GBP362,143. Rightmove said that prices tend to fall in December, as Christmas approaches. But this month's drop is bigger than the past 20-year average of 1.5%, as sellers look to price attractively to secure a deal. The fall is partly driven by more new sellers looking to price below the competition now that the pendulum has swung towards a buyers' market, Rightmove said.
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Mortgage lending is set to slump next year, as the number of arrears and repossessions increases, according to a trade association representing the UK banking and finance industry. The outlook for 2024 is one of continuing challenges in the mortgage market, but the main pressures on affordability look to be peaking now, UK Finance said. It added that, while it will take some time for the pressure on household finances to recede, it expects the situation to improve in 2025. Giving its predictions for next year, UK Finance said it expects lending for house purchases to fall to GBP120 billion next year, from GBP130 billion in 2023. External remortgaging activity is expected to fall to GBP60 billion, from GBP65 billion this year.
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BROKER RATING CHANGES
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UBS raises National Grid to 'buy' (neutral) - price target 1,190 (1,135) pence
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Berenberg cuts Ten Entertainment Group to 'hold' (buy) - price target 413 (390) pence
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COMPANIES - FTSE 100
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Drugmaker GSK won European backing for its Jemperli drug in tandem with chemotherapy to treat a form of endometrial cancer. The company received marketing authorisation from the European Commission, making the combination the first and only frontline immuno-oncology treatment for adults with mismatch repair deficient/microsatellite instability-high primary advanced or recurrent endometrial cancer. Endometrial cancer begins in the lining of the uterus. "People living with this type of endometrial cancer typically experience disease progression and poor-long term outcomes with current standard of care. With this approval, we can expand the number of patients who can potentially benefit from treatment with Jemperli in Europe, including patients who are earlier in their journey," Hesham Abdullah, GSK's global head of oncology research & development said.
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COMPANIES - FTSE 250
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Hipgnosis Songs Fund said it has completed the USD23.1 million sale of 20,000 songs, which it will put towards paying down debt. The planned disposal of these "non-core" assets was first reported in September and they were sold at a roughly 14% discount to a September valuation. "The net proceeds of the sale will be used to pay down revolving credit facility drawings, providing the company with greater headroom under its future covenant compliance reporting. In addition, the London-based investor in music royalty rights said it has named Shot Tower Capital as lead adviser for due diligence of the firm's assets as part of its strategic review. In October, two key votes on the firm's future, including a poll on its continuation, did not go its way. Roughly 83% of votes cast were against the company's continuation. In addition, Hipgnosis said around 84% of votes rejected a planned portfolio sale. In September, Hipgnosis said it was selling off 29 of its music catalogues for USD440 million to Hipgnosis Songs Capital, which is a partnership between HSF's investment adviser Hipgnosis Song Management and funds advised by New York-based alternative asset manager Blackstone. HSF announces interim results on December 19.
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OTHER COMPANIES
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Business recovery company Begbies Traynor reported a first-half profit fall, on acquisition-related costs, though its revenue climbed and it lifted is dividend. Pretax profit in the six months to October 31 fell 40% on-year to GBP3.0 million from GBP5.0 million. It registered acquisition-related transaction costs of GBP3.9 million, putting some pressure on its bottom-line, climbing from GBP800,000 a year prior. Revenue was 13% higher at GBP65.9 million from GBP58.5 million a year earlier. Begbies declared an interim dividend of 1.3 pence per share, up 8.3% from 1.2p. Begbies said it is "confident" of reporting annual adjusted pretax profit in line with market expectations, which stands at a range of GBP21.9 million to GBP22.5 million. At best, that would represent an 8.7% improvement from GBP20.7 million in financial 2023. Adjusted pretax profit in the half-year rose 10% on-year to GBP9.9 million from GBP9.0 million.
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Allergy Therapeutics said its cost cuts have helped extend its cash runway to the end of next month. The biotechnology firm, focused on allergy vaccines, back in November said it had extended its cash runway until the end of 2023. Sales for the financial year ending June 30 are to expected to be weaker than 12 months earlier, though outgoings are to be slightly lower "following cost control initiatives". "While no firm commitments are in place to provide further funding, discussions with certain major shareholders are well advanced," it added.
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By Eric Cunha, Alliance News news editor
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